United Airlines (or just United) is the third-largest airline in the world. By understanding the size of this company one can easily imagine how strong COVID-19 must have impacted the organization. Between 2020 and 2021, the number of employees exceeded the service demand, leading to the creation of new retirement plans to encourage employees to leave earlier. This articles give an answer to ‘Does United Airlines Have a Retirement or Pension Plan?’.
Does United Airlines Have a Retirement or Pension Plan?
In an attempt to decrease its staff, United Airlines has offered different versions of a Voluntary Separation Program and even created one directed to flight attendants only. Keep reading to know about these new programs and the former plans that are still offered by the company, like a health account and its 401(K) Plan.
Voluntary Separation Program
The Voluntary Separation Program, also known as VSP2, is available for all representative employees of United Airlines in the U.S. and Puerto Rico. Every employee can apply as long as they’re not part of any of United’s subsidiaries, and they are either active or on leave.
Although the program’s benefits are slightly adapted to every individual, based on their years of service and age, the VSP2 offers:
- Up to $45,000 in credit for a Retirement Health Account that covers the individual and his family’s medical expenses.
- Travel passes to be redeemed by 2026.
- Eligibility for medical reimbursement (disregarding the type of the employee’s medical plan).
Likewise, this program doesn’t exempt the individual from being re-hired by United. The former employee is free to work at any of the United Airlines’ subsidiaries too, but his benefits will cease in such a case.
Voluntary Separation to Leave Program
This retirement program was created for flight attendants only. There are two types of the VSL Program. They are available for employees older than 45 years that have attained at least 15 years of service.
- VSL-A program
Includes 33% of base wage paid within the first 10 months from the beginning of the pre-separation leave to the end of the year. This program also includes tax-free funds for medical expenses and travel privileges available until 2026.
- VSL-B program
This program offers a payment of 100% of the base wage from March 2021 to August 2022. Although the VSL-B lacks tax-free funds for medical expenses, it still includes the same travel benefits as the VSL-A.
Pilot Retirement Account Plan
Before the COVID-19 pandemic arrived, United Airlines already had various retirement plans, like the PRAP (Pilot Retirement Account Plan). As the name explains, only pilots employed by United were eligible for this plan.
The PRAP offers pilots the chance to start building their retirement financial future by investing in several funds (managed by professionals) while they continue working. The contributions are made through automatic payroll deductions.
Once pilots are part of the plan they can get: expert advice to invest (even on their own), loans from their PRAP accounts, as well as access to different tools to review and manage their progress.
The Retirement Health Account
United Airlines offers a health expense reimbursement account to retired employees: the Retirement Health Account (RHA). No other company offers this type of health account! And you’ll soon know why.
The most important expenses covered by the RHA are:
- Doctor consultations
- Medicare
- Dental care
- Co-pays
- Long-term care and nursing care
United Airlines contributes $1 to the RHA for every hour that the employee works, which means that the health account is completely provided by the company. People that can benefit from the RHA are the retired employees, their spouses, and select dependents.
401(K) Retirement Savings Plan
The 401(K) is a saving plan offered by most employers in the United States. In the case of United Airlines, all employees are eligible for the 401(K) Plan from the moment they are hired. As participants, they get to choose the percentage of contribution that goes to the plan (up to 15%); this quantity is retrieved from the employee’s pretax earnings.
The contribution rate can be changed by participants over time, however, there’s a settled limit for the 401(K) Plan and that is $57,000. After the limit is reached, incoming contributions go to the RHA (above mentioned). Additionally, participants can borrow from their account balances, as long as it is less than $50,000.
Conclusion
United Airlines has been coerced to create early-leave and separation programs to deal with its exceeding staff in the pandemic, which forbids people to travel as before. The current base program is the Voluntary Separation Program, but the company has also designed a special program for flight attendants, the Voluntary Separation to Leave program. In Addition to these programs, United Airlines continues offering a 401(K) Plan and a health account; the best part is that all employees are eligible to apply to them!
Frequently Asked Questions
Which are the United Airlines’ subsidiaries?
United Ground Express (UGE), United Aviation Fuels Corporation (UAFC), United Cogen, and United Vacations are some of United’s subsidiaries.
Can an individual cancel a benefit from the VSP2 while keeping the others?
Sure. Some people cancel their medical coverage after they find another job, although they wish to keep the travel passes.
